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tv   Market Makers  Bloomberg  March 20, 2014 10:00am-12:01pm EDT

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do not want to touch it. >> they better be prepared to wait. thank you so much. we are on the markets in 30 minutes. market makers is up next. >> live from bloomberg headquarters in new york, this is "market makers." with erik schatzker and stephanie ruhle. >> ukraine prime minister's pulling out of crimea. talking to bloomberg exclusively and we will have the latest. >> in china, hollywood heavy hitter jeffrey katzenberg is in shanghai announcing a $3 billion investment that will change the entertainment industry in china. hotseat. charlie byrd is new york's hottest restaurant. we will take you inside the room -- inside the kitchen. welcome to "market makers."
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i am a very fortunate stephanie ruhle. y? >> matt miller in here with you. >> we are sending you the best, but in the meantime we are getting you breaking news. existing home sales are out. michael mckee is on hand with the real deal. rate it down. it down.eak >> a reasonable news story with home sales. 4.6 million at dollar annual rate, barely lower than it was in january. five,ober we were in the so we have a long way to go. whatever the weather effect, it has been relatively steady for the past four months and we expect a big spring rebound. here, a drop in condo and co-op sales, 1.8%. single-family home sales, just
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.2 of 8%. one of the complaints about home sales in the past couple of months has been not enough homes for sale, so that may affect things. the other number we just got -- and here is some good news for people worried about the economy and the weather. february -6.3, and it comes in a positive numeral mind. it looks like overall the employment index is lower, but the overall index higher for the philadelphia fed. the general news is really good on the economy. for those who have been hoping for a we bound -- and rebound from the weather effects. >> we have bob shiller with us now for some reaction on the housing numbers. yale university professor.
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welcome, bob. what do you think about the numbers here? a slowlooking at recovery, not that bad? >> existing home sales is declining on a seasonally adjusted basis for some months now, so it is not just the weather, the winter season. something is going on. a did the weather not have big effect on this, because it seems to have an effect on everything else. >> the housing market slows down every winter, but this was an unusually -- i don't know how much that affects people, but it winterunusually wintry in certain parts of the country. but it looks like there is some softness in the market, and housing starts have fallen, too, so i am -- but this is not a disaster, it is just a weakening market. a --at does the sale about
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what does this say about a bifurcated america? and you look at the market in new york city and l.a., it is on fire. shoebox.t afford a how do you balance the two? >> it is not a state of balance. it tends to be the cities that were very volatile before that are still going up. i tend to think of the speculative dynamic, that people have seen home prices go up and they are back to the races. many people are. on the other hand, the chicago futures market is not showing big increases. survey of home buyers expectations is not really showing a lot of increasing kind ofions, so it is an ambiguous situation. i would imagine nothing really dramatic is going to happen. wewill see more modest -- had huge price increases over
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the last year nationally. it was up 13.4% in the last 12 months. i imagine that will moderate. i want to ask you about the characteristics of the buyers. we are not seeing an increase in first-time homebuyers, which is what you would hope to see in a recovering housing market. we are still seeing a percentage of investors buying these homes but they went up. are they getting the wrong mix here? >> in some ways it is troublesome and in other ways it is not. to thing is americans seem be more interested in renting now, so there is a natural business of converting to rental, and that is part of what investors are doing. it is a healthy sign, but it is not particularly encouraging that people want to rent, not encouraging for detached single-family home prices. detached single-family homes do not confer easily to rentals.
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>> doesn't mean they have just done the math and owning costs more for them than renting right now? what does that tell you about home prices? >> the big cost that has changed is the mortgage rate. that went up sharply in early 2013, right around the time the fed announced tapering. that they were thinking of tapering. that is a big factor. i think that the market was really strong in late 2012 because of the news that mortgage rates were at record lows. that galvanizes people to action. you tell people that mortgage rates are at the record lows, and they think, hey, they can only go up for the year. a deferred spending for housing. >> they are still incredibly low. what would make you more
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bullish, more optimistic on the housing market long-term? if you say mortgage rates that are lower, i cannot imagine that would make a huge difference because they are so low to begin with. >> they are low but they are not record low. think, nowe people they could go down again because they are not the record low. a salient effect that was really trumpeted when the record lows were hit. but you are right, they still are low. it is plausibly not a bad time to buy a house. >> because they are going up. you heard janet yesterday -- janet yellen yesterday saying up, sotes will follow buy a house now. >> and that sounds like 2005, and janet yellen saying you had better buy a house now, that makes me think that is what we were doing six years ago and
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what do you think, bob? >> i have my own survey data. excited.e just not as six years ago people thought it was now or never. back, go a little further 2003 or 2004, people thought home prices would go up 12% per year for the next 10 years. they thought this was it, and you could borrow 90% of the money. they were thrilled by this investment. if it were only true. i don't see that kind of excitement now. >> bob, yesterday janet yellen probably used the term "shacking up" during a news conference for the first time ever. 30% of the buyers, the homebuyers, first-time homebuyers. this time they were 28%.
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what happened to all those married,tting engaged, moving out, and buying a house? >> i think she is right. they are renting or living with their parents. i don't know what they are all doing. the big question is whether this is a new trend. people think that it is not just temporary, not just the reception, but that we have lost our extreme love of phil -- love affair with the owners occupied homes. that is something the buyers now have to consider. most of the homeowners who have anbuy their own home not as investor are trying to hold on for many years. much healthier way to look at real estate? five or six years ago you would hear everyone and their brother saying real estate only goes up. that is the wrong way to think about any possible investment. >> that is absolutely right. it is one of those remarkable delusions that i talk about in my book.
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home prices did not go up at all in real terms between 1890 and 1990, in 100 years. yet somehow people have the illusion based on recent data at that time, in 2005 or so, that they always go up. these kinds of delusions can spread from time to time, and it is unfortunate. >> those may be the same people buy on their credit cards and end up in debt for the next three or four years. >> not enough people watch your show. >> i agree with you. >> michael mckee, always a pleasure to have you. "shacking up" >> the top news stories from around the world, new satellite images raising hopes that the
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objects found in the south indian ocean may have been debris from the missing jet. two military search planes were sent from australia, but they could not find anything. another sign the labor market is number ofronger, a americans filling out first-time claims for unemployment benefits , close to the lowest level in almost four years. in initial claims usually fall before hiring picks up. and the data analysis firm backed by the cia has been hired -- palantir technologies will to thedetect what led fine for insider trading. the sac cannot get out of the news. sac, cia -- you never thought they would be in bed together, but guess what -- steve needs to tighten his game up.
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>> if you want anybody on your side, i think the cia is probably a good start. in a moment, the ukraine next move against russia. we will hear from the ukrainian prime minister. plus dreamworks gets the picture, doubling the number of animators and artists in china. we will hear from dreamworks ceo jeffrey katzenberg. this is "market makers" on bloomberg tv. >> and during the commercial, you can tweet us.
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aren brussels, eu leaders meeting to discuss how to pressure vladimir putin after he strengthens his grip on the cranberries territory -- on the crimea territory. chilcote, are we expecting
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another russian blacklist here, another list of sanctions? is that the next step? >> there is no question the eu leader would like to punish vladimir putin for pushing forward with annexing crimea. the question in their mind is they are gathering right now, how they do it and when they do it. one option is to expand the blacklist of russian officials that will be subjected to asset freezes. maybe go further up the food chain and subject ibo closer to putin-- people closer to to sanctions. they make decisions by consensus. there are 28 countries, and it is not clear all of them are ready to stomach that yet. the finnish prime minister said the markets are already doing a good job of pushing russia and he thinks that might be the most effective tool. in moscow they are not paying attention at all. the lower house and the parliament just approve the
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annexation of crimea, so tomorrow it goes to the upper house and it is a done deal. they are understandably saying even if we go ahead with economic sanctions, is that really going to change putin's course? they are wondering that right now. tighteningabout the grip on the crimea territory. what is the situation in crimea as we speak? interesting, very tense this week since the crimean's declared themselves independent. a bunch of ukrainian troops want -- a bunch of ukrainian troops are there that the locals want out. they want to move into the east of the country because he does not think this incursion of russian troops is over. >> it is crystal clear for us that russian authorities will
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try to move further into used in ukraine. but we are still maintaining control and we still preserve this stability in these regions. the polishheard from prime minister. he says he wants the you leaders at this meeting to discuss full economic sanctions because he thinks russia will not stop with crimea. >> ryan chilcote in brussels, thanks for a much for that. >> our next guest is an expert on the subject, traveling to europe last week to meet with german chancellor angela merkel about the deteriorating situation in the ukraine. here to tell us what the eu and is kene planning to do .oth welcome. >> it was tuesday morning, two days ago. >> what did she say? >> we were talking mainly about ukraine and russia, and german
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policy toward russia for years has been very much valued by the business community. engage, then vladimir putin will behave more nicely. >> and angela merkel said -- >> hold on a second, if you just behave and follow the rules, putin will behave more nicely? >> it did not work. the processl is in of recalibrating. part of it is rhetorical and part of it is sanctions. it is not simply on crimea but the threat on further incursions into used in ukraine. said theseutin has right wing forces are attacking russian language speakers. that is mostly fiction, so the way to undercut it is to first of all deployed international monitors. >> how do you do that? has eight hundred
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monitors ready to go. good and is not letting them deploy anywhere but in crimea where they are urgently needed. prudent to oppress the ukrainian government. a tv journalist was hacked the other day for having the speechy to air putin's in crimea. >> are you afraid? >> i am very worried. we see prudent cracking down in russia, shutting down tv stations, closing off websites, arresting hundreds as activists all with the aim of preventing anybody to challenge his propagandistic view. >> preventing the truth from coming out? >> he has been doing that a number of years. >> it has gotten much worse. there has been a gradual trend in the last two years, but it is month ore in the last
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so. >> why do people in crimea want to be part of this? fear? how does he respond to these sections of georgia -- >> and it is still there. russia is still in south georgia. the people have basically forgotten. they were at the center of the universe when russia took over and now they are forgotten. the best long-term strategy for rights is to create respecting demolisher see -- democracy that the ukrainian people want to be apart of. >> do they have the ability to do that? >> ukraine has been up and down. they had their revolution a couple of months ago. hopefully this time around they get it right. >> do they have any choice? crimea, from our
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perspective, it looks like a done deal. the eu is looking for a way to back out of sanctions. there is a strong business relationship with russia and they want to keep getting their fuel. ?sn't it over there >> i think crimea is over with for the time being. the real issue is eastern ukraine. food and is threatening to invade there. is threatening to invade there. i have not seen a putin stepped that they did not want to respond to. america is finally beginning to stand up to the business community, but it is not clear as much -- it is not clear how much. the answer is shifting quite radically. what?m what to business to suddenly recognizing that germany is the leader of the european union. if germany does not act, the eu does not act. looking for a
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better balance, not a complete turnaround. >> where you need to go past this view is trading that is prudent going to change that? it does not. roth, the executive director of the human rights watch. >> the menu for success -- how one of the most successful restaurants got that way. ♪
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living the dream in china. we will hear from dreamworks ceo jeffrey katzenberg about the city's bold new initiative. >> plus, more americans are cutting the cable cord, watching their favorite programs on any
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video services instead. to you give that story next. if you cannot watch us on cable, watch on your phone or your tablet. >> don't forget to tweak us. what is matt's mystery drink? ♪
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live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle." >> welcome back to "market makers," i'm stephanie ruhle joined by matt miller, in for erik schatzker. in case you are wondering, it he just told me to kiss his grits. >> i was doing my flo impression. works, jeffreams katzenberg, unveiled designs for the center in shanghai. stephen engle of bloomberg news is there now.
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dreamworks really making a $3 billion push to draw in chinese consumers. >> absolutely. haveig hollywood studios been battling piracy, battling censorship here. they have been battling the quotas for the big films that come into china. they all want to have a foot on the ground or two feet on the ground. theirland is building shanghai disneyland that will open up at the end of this year. the box office here in china last year, domestic films out paced the big hollywood blockbusters for the first time. there is a huge market here, and dreamworks, led by jeffrey katzenberg, are building this dream center, which is going to u.s. ut $2.5 billion they will have a big movie studio, as well. onre are animators working
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their next films. there will be 400 animators working in shanghai by the end of next year. they will launch "kung fu panda 3," next year. i asked him what the strategy would be, and he says this center will rival the west end in london and also broadway in new york. >> we are making movies here in china for china, for export to the rest of the world. in order for it to be exported, it has to be of the highest quality. this is within < handful of years, going to be the number one movie market in the world, so we think it is a great center for us to attract great artists in china, and we think it could be a world-class competitive studio. jeffrey katzenberg is going to say that. he is the guy putting all the
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money behind it. what do analysts think? a huge undertaking in a country that over the last two years has been known for these vacant cities, giant, massive buildings to replicate new york >> paris, and no one is in them. what kind of risk is this? thingy say the same always. they cannot afford not to be here. again because of the potential. for the moviem operators here, the hollywood studios, is there stuff gets ripped off not only by dvd , on numerousline sites. there is a lot of risk that you are giving up with your product here, so they are taking a different approach. an entertainment movie studio where they will make the movies here in china and try to sell it in china and also take the product that they may hear and sell it abroad. again, there are only 34 movies
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coming into china every year. the big hollywood blockbusters. what they are trying to look at our joint productions with the local production houses. a lot of different strategies, but censorship is still tough and the quotas are different as well. >> stephen engle in china, great story. i want to go there. i want to go to see this. >> without a doubt, definitely. maybe to go see the gray wall? theaybe i will be in mcdonald's there. i wasas lonely when there. so i will be less lonely. when we come back, we reached a milestone. >> a little awkward. >> that's ok. reached a milestone in the pay-tv business, but it is nothing for cable operators to cheer about. we will find out next on "market makers turcotte during the
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break, matt and i will be making big plans for china. and his mystery drink. ♪
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>> welcome back to "market makers." i'm stephanie ruhle, joined my my friend and -- by my friend and traveling companion matt miller. pay-tv prescriptions -- subscriptions fell by a quarter of a million last year according to the latest snl kagan research. this is the first full year decline in tv customers, so what does this mean for the industry? an expert, then managing partner in media tech partners. talkingeveryone is about this. everyone loves to use this to their advantage. what does it mean?
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>> nothing is going to happen radically or in the next few years. there is too much money involved in the cable industry. the permission fees they pay the networks are in the billions of dollars, and no one is going to walk away from that. so cable will do what they have to do to stay alive while working out a way to get over the top. elsedon't know if everyone finds this as weird as i do, but stephanie does not have netflix. >> i don't. >> she is the only person in the world who does not have netflix. >> i devote a lot of time at home to writing haiku. >> this is one of the problems for cable tv. everyone else besides stephanie ruhle has netflix, so we can all watch "raking bad -- "breaking bad." >> "house of cards." >> i want to hear one of
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stephanie's haikus on binge viewing. >> you know when i do it? on saturday mornings i watch : sv." order >> every one of the cable ms o's -- >> what is that? >> multiple service operators. they are not just cable operators, they are multiple service providers. comcast whether you are or the small half dozen out there, are worried about the --e warner-comcast merger the key to watch is, are we going to have to pay usage fees if you are heavy users of netflix on anything else on the internet? have verizon i
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cable is i need verizon files internet service. >> and so far usage fees have the courts,ests in and the sec has laid back and said we are for network neutrality, which means everybody pays the same, no heavy user fees if you are a big user of video. that is going to be something the congress is going to take up in the next 12 months. >> do you think time warner -comcast will use the data point, that subscriptions are down -- are they going to use the data part -- the data point to push investors and the government? >> absolutely. the combination of time warner, comcast, there is a lot of consumer resentment against it and a lot in congress who will try to slow it down. it will pass, but it will yeah it will pass,- but it will be a tough hurdle. they are already committed
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nbcuse of their buy of universal. no usage fees until 2018. the fcc and congress may put another five years on that. that is important because right now the cable industry is reaching out trying to stem the loss of subscribers. time warner cable has a special deal, and over the air television network and a few others for 12 -- for $12.99. eo's-- aer area fee. >> hold on. >> if the supreme court blesses eo and gets past the objections that the networks have launched against it, it will be a serious nail in the coffin of tale -- cable
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television, unless one of the big cable companies buys it. they have 100,000 subscribers. >> where are they he echoed >> they are in seven or eight cities right now and right now they are in a stasis because they are waiting for the supreme court decision. if they are blessed by the courts, they will be out in 25 cities across the u.s. >> we want to ask you about what we just talked to stephen engle about. can they make deals with comcast? can they avoid -- >> they are already paying more. you saw there was a big story 10 days ago, because they are putting so much content through charges themmcast now an extra fee for the distribution of house of cards. netflix will have to raise their
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prices. that is the big news. it makes amazon look good because they slipped in a price increase last week before netflix. just before you joined us, we were seeking their speaking to stephen engle. $3.1 billion investment. i think this is risky. what do you think? >> i do not think it is risky at all. it is dreamworks animation, not dreamworks studio. >> what's the difference? >> they are two different companies. animation is a home run around the world because you can dub different languages very easily and economically. the most important aspect of that announcement is that it is not $3.1 billion for dreamworks billionn, it is $3.1 from their partner, cmc capital partners, which is a government ,inanced private equity firm
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led by shanghai media group. >> this $3.1 billion investment in china is backed by the chinese government? >> you bet. it is a home run. >> plus they have "kung fu panda." the chinese are going to love that. >> ok, that is probably a broad generalization. isy will love it because it -- because they love jack black. bibb, a man with many hats. the original publisher of "rolling stone." the guy who sold ducati. >> media expert superstar. >> that was not a haiku. >> it may have been. he is also very stylish. coming up, inside the kitchen at
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one of the hottest restaurants in the country. it is right here in new york city because this is the hottest town in the country. more when we come back. you're watching "market makers" on bloomberg television. ♪
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>> this next segment may be the only way you can get in this restaurant. if you want a table, you had better book a month in advance. it is charlie byrd's here in manhattan. we talked about the challenges for this week's "small to big." >> charlie byrd was a dream that took a few years to come to fruition. well,ed to cook real food and one of the things that we --lized right away was finding it was the biggest problem for us. york, the line cooks or
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dishwashers have the advantage that they can go and cherry pick the places they want to because there are so many restaurants out there. and we opened, we had to figure out how to work four stations and there were only two cooks. we had one dishwasher who would show up some days and not other days. scrambling.selves mike, was washing dishes. when he was not, i was washing dishes. that becomes a real challenge to run a restaurant kitchen without employees. we realized we had to look at multiple places to find great team members. we had to look at other restaurants and talk with other chefs, and it took a while to build that core, that family. our cost is made by my mother-in-law, rosa, who is a woman from italian
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natalie. she took pity on us because we were making pasta at 3:00 or 4:00 in the morning, not enough for the onslaught of people showing up at our door. this is something that meant a lot to us, but then for the team justrs -- wow, this is not a job, this is a family we are working with, and that made all the difference. the passion came out in the food, and people could taste it in the food. it has become an amazing success for us almost overnight. we are back. >> that is an extraordinary story. >> i am surprised you have not been there. when somebody said that we were going to do a story that no one has been to -- that everyone has been to -- hill that --er the let me tell you something, i still think it is.
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song he wasy playing was 25 years old. >> the last thing i want in a restaurant is a dj i am so glad i don't live in this series. >> i am too old to hit a club, but when you go to a restaurant where there is a dj and everyone is dancing around the aisles, it is like i am still in miami. , an extraordinary story. i know i am going to go there, but now that we have done this incredible package on it, we are never going to get in. 60 may be the new 40, but in -- 35 may bey, 40 over the hill. industry ageless? scarlet fu digs into employee
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demographics at some well-known tech companies. i like to say that 38 is the new 26, but maybe that is just here. >> what happened in silicon valley, you will not be surprised to learn that the employees are from the middle 20's to middle 30's. let's start with facebook. the average age of employees are 26 years old. mark zuckerberg is 30. google, 29 years old, 53,000 employees. apple, 31, amazon 31. amazon also has a ton of employees, 109,000. >> these are older companies, so the chances of having someone work there 10 to 15 years is good. >> speaking of older companies, let's look at some of the older ones -- linkedin -- not sold. -- not so old. 32 years old, the average employee.
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331,000 employees at hp. yahoo!, 33 years old. hewlett-packard makes printer cartridges or something. >> for those of us thinking, could the tech industry of be approaching a bubble? when you look at the average age of employees, maybe this is a bit of a bubble. do they need adults in the room? yes. they have extraordinary ideas, they may have great vision, but that does not necessarily mean it has long-term attainability -- long-term sustainability. >> there is a really great article in "the new york times thezine" talking about how opportunitiesre
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in less sexy areas of tech like semi-conductors, data storage, and networking." what they care about is coming up with more web apps. they are going off to build web apps, and meantime -- there is so much demand for all of that. >> microsoft servers are actually crashing. i was trying to play a game the other day when i got it and i could not get on the network for eight hours. >> they are moving on to build more apps. >> what does that mean for 42-year-old who need jobs right now and they go to amazon, google, or linkedin? are there no opportunities because they are old dogs and over the hill? >> maybe, yeah. someone who is 42 has never
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heard of what's app. even someone as young as 40 is scratching his head about that. 60'sknow people in their who have snap chat, and they love it because of the different images. loved snap chat. >> the latest off the charts -- >> my gosh, it is 56 past the hour. "on the market." let's take a look at the indexes across the board with the s&p .25%, the s&p 500 -- the dow at .28%, the nasdaq at .19%. >> starbucks will be adding alcohol and light fare to their menu. first thing in the morning, i am
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not sure about alcohol. we will be back with more. ♪
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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. making putin pay the price. president obama will speak about sanctions in russia. >> doubletree has launched an international expansion plan. dozens of new hotels are in the works. >> it is time to waste away in margaritaville. lostroblem is not the shaker of salt, it is the lines. -- limes. matt miller packing,
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maybe down to margaritaville. i am joined by alix steel. matt who is in for erik schatzker. is time for the newsfeed. it is from around the world. indian ocean, search planes came up empty as they search for traces of the missing jetliner. two object had been spotted, but the planes were unable to find them. the search resumes tomorrow morning. sales of previously owned homes fell in february. the slowdown is being blamed on higher mortgage rates and declining affordability. home prices are up nine percent over a year ago. it sounds like starbucks want to take a bite out of your local bar. the coffee chain is expanding its evening i'll call and light
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-- alcohol and light bites menu. they have been trying to boost growth by adding more non-coffee items. what do you think? don't think serving alcohol is going to do anything. i am not a coffee person. the federal reserve is releasing the results of the stress test today at 4:00. what will this report card say about the health of u.s. banks? in someone who covers financials for bloomberg news. it is a big day for banks. what do we have to look ahead to? come in twosts packages. today is one and the next week we will get another one. the stress test today as mandated by the dodd-frank act. portfolios the bank through a number of scenarios. to look like a
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crisis to see whether the bank capital can withstand another downturn. >> are there tougher rules? >> it seems every year the fed makes it tougher. they say that each year they raise the bar they are expecting the biggest banks to be able to meet them there. this year we have a spike in interest rates. the fed is worried about what interest rates are going to be doing in the next couple of years as they had higher. -- head higher. bakeddecline in stocks is in. the fed is looking at leverage loans this year. >> i want to bring in todd. these,hear about all of i think, no big deal for jpmorgan. what about the next one of financial institutions. can they meet the standards?
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would tell you is we are looking for more conservative capital distributions this year. as you look at some of the regionals versus the jpmorgan's and morgan stanley of the world, i think they are better positioned in terms of the magnitude of the increase from the share buyback as well as dividends, whereas from the multinational, the big guys, you will see more conservative, absolute distribution and what we have seen in the past couple of years. baras said earlier, the continues to be raised and there is an expectation that these banks need to continue to make ongoing progress towards meeting the various requirements as a relates to capital, liquidity, the volcker rule and so forth. >> is an unintended consequence
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looking up these right equity ,ry ends -- equity giants saying sure, let the banks get out of the businesses. we will make the big loans. >> that is right. >> i am so sorry. i need to interrupt you. we need to take you down to washington, d.c., where president obama is speaking on the ukraine and sanctions. deeply concerned by events in ukraine. we have seen any illegal referendum and crimea. an illegitimate move by the russians to annex crimea. of escalation, including threats to ukrainian personnel and crimea and threats to southern and eastern ukraine as well. these are choices the russian government has made. choices that have been rejected by the international community.
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as well as the government of ukraine. because of these choices, the united states is moving to impose additional costs on russia. based on the executive order that i signed in response to russia's initial intervention in the ukraine, we are imposing sanctions on more senior officials through out the russian government. a number ofioning other individuals with substantial resources and influence to provide material support to russian leadership. as well as a bank that provides material support to these individuals. we are taking the steps as part of our response to what russia has already done in crimea. at the same time, the world is watching with concern as russia has positioned its military in a way that could lead to further incursions into southern and eastern ukraine. for this reason, we have been working closely with our european partners to develop more severe actions that could
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be taken if russia continues to escalate the situation. as part of that process, i signed a new order that gives us the authority to impose sanctions on individuals and key sectors of the russian economy. this is not our preferred outcome. these sanctions would have a significant impact on the russian economy and could be globalive to the economy. further escalation will only isolate it further from the international community. governic principles that nations around the world must be upheld. that includes respect for sovereignty and territorial integrity. the notion that nations do not simply redraw borders or make decisions at the expense of their neighbors simply because they are larger or more powerful. prioritiesother top
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is providing assistance to the government of ukraine. week,ravel to europe next to meet with the g7 and other allies, i urge congress to pass legislation that is necessary to provide this assistance. do it right away. expressions of support are not enough. we need action. moves that the imf swiftly to provide a package of as theyfor ukraine pursue reforms. in europe, i will be reinforcing a message that vice president biden carried to poland and the baltic states. natoca's support for allies is unwavering. we are bound by our commitment to defend one another. we have a set of shared values that so many generations sacrificed for. we have increased our support for eastern european allies and
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we will continue to strengthen nato's collective defense. we will step up our cooperation with europe on economic and energy issues as well. me close by making a final point. diplomacy between the united states and russia continues. we have emphasized that russia still has a different path available. one that de-escalate the situation and one that involves russia pursuing a diplomatic solution with the government in kiev. the russian people need to know, and mr. putin needs to understand that ukrainians should not have to choose between the west and russia. we want the ukrainian people to determine their own destiny and to have good relations with the united states, russia, europe, with anyone that they choose. that can only happen if russia also recognizes the rights of
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all of the ukrainian people to determine their future. rights that people and nation around the world understand and support. thank you very much, everybody. that was president obama speaking on the south lawn of the white house. let's go to peter cook for more on what the president said. >it seemed like tough words, light on details. what is your take away. >> a couple of details that stand out. in terms of ratcheting up the sanctions, the last round of sanctions aimed at seven russian officials, laughed off by the russians. this one could get their attention. the president testified a russian bank will be targeted. key sectors of the russian economy will be targeted as well. we need to find out which bank and which sectors of the russian
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economy. are we going after the energy sector? that would be significant. it would be a significant escalation by the united states. we need to see the list of supporting the russian government that on this sanctions hit list. until we see that list, it is hard to tell whether an asset freeze would make a difference at all. is a step up from what we have heard before. the details matter. the russians may laugh it off again, but what we're seeing is the administration taking gradual steps each time. will wait to see the russian reaction. movingou think we are closer to the administration preventing u.s. companies from doing business in russia? a long ways off at this point. it is not something the industry show wants to do. it is not something u.s. companies want the
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administration to do. there has been out reach between ceos and the treasury department. ceos from a range of industries are talking to defense secretary chuck hagel about what impact it will have on businesses. the message back to them is this is american foreign policy at stake. you took a risk in moving your businesses or opening businesses in russia. it will get some sympathy from the government, but at the end it will not be decided on american businesses doing business in russia. >> peter cook, thank you so much. alibaba's writing coattails. -- riding alibaba's >> coattails. >> the first outside investor in facebook talks about the next big tech ipo. .eter theil
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anyone who sought the social network, he was the guy who was the strategic arner -- partner. the only thing you should focus on in "the social network" is justin timberlake playing sean parker. >> he was really good. he is funny, he is a great dancer, great singer. he is super hot. >> this is "market makers." -- we talk about the economy. we're going to talk about janet yellen and what it has done to the market. catch us streaming, on-demand, on apple tv, on ipad, any device you have. stay with us. we will be back with more in a few. ♪
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>> a new giant is investing in mobile messaging, ali baba. they let a $280 million chat app. in a video julia hyman has been following the story. andst got used to whatsapp having it on my phone. >> where have you been? tell me a little bit what tango is. >> it started as a video chat app. >> like face time. >> this was a way to do it on the android platform. -- for mobile, unlike skype.
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built for mobile, mike skype. you can do phone calls and texting and now it has expanded into gaming. it is advertising, gaming, they don't charge for things like phone calls. >> what did alibaba wind up seeing in the company? looking at about 70 million active users. this is ans -- investment. it is not buying the company. it gives it a little bit of a foothold in this market. tencentsok at rechecked, that is just a chat company. it is starting to get into ali baba's market a little bit.
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>> a defensive move in some kind of way? >> from the perspective of tango, it is facing north america, a mike whatsapp, which is more international. >> is there any thought on a takeover? want toey just diversify more into the u.s. and more u.s. consumers. >> it could be partially that. we have seen a little bit of a -- you seere alibaba that initial investment and a takeover at some point down the road. whaten you look at whatsapp was bought, anyone investing in that type of businesses looking for an ancillary company.
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>> that leads to the slippery slope of that kind of conversation. >> you have to get on it. i want to continue this conversation. yahoo!'s stake in ali baba is largely responsible for the 150% stock rally. public, baba goes yahoo! will pare its ownership, wondering just how valuable the core business is really are. want to turn to brian wheezer. yahoo!.s let's start talking about the real value at yahoo!. we cannot give a lick of credit to marissa mayer. she walked into that. since she took that job in the stock is up 150%, should we be singing her praises or sending a inc. you know to mr. yang? >> even she has been grateful to
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.erry yang there was great interest early. >> what core businesses does --oo! have right now that when you think about what melissa -- marissa mayer said, she was excited and thrilled that they were reaching out and katie couric was going to be part of the yahoo! universe. she is an engineer. from an engineering respective, what are they doing. been very clear about what they have been focused on. first it was people, products, and then revenue. if you do not have a full and complete understanding of how to make the revenue, maybe the people and products on going to be the right fit. -- are not going to be the right
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fit. they are only now beginning to figure out the revenue problem. they're getting there. us a if you strip out ali baba and yahoo! japan, what is your value for yahoo!? >> i have about 7.5 billion dollars in value in core yahoo!. seven dollars a share. the company is reducing a lot of cash flow. even after you account for ongoing acquisitions to drive any growth, there is no growth organically to come from yahoo!, only that what they buy -- that which they buy. they produce a lot of cash in a business. unfortunately, it is a minority of the validate -- the value of the company. $7 or so in yahoo! japan, there some cash. is there going to be a
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knee-jerk reaction before the core business takes precedence? >> it will be interesting. investors are unable to show their view of the value core of yahoo!. they're such a wide range of plausible assumptions of value for alibaba and what it means to yahoo! shareholders. there is no clarity as to what happens with taxes. are they going to pay 35% tax or zero? what rate will they be able to sell shares in the ipo versus the aftermarket? what will be -- they do with the proceeds? there some uncertainty following me ipo of alibaba. investors will be able to react to what yahoo! does and say we like what they're doing, we do not like what they are doing. the stock value will go up or down. think post the alibaba
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ipo we will see investors who have taken this ride sell their stakes? >> if you take the upper end of the valuation, you assume away the taxes, you can say there is as eerie value in core yahoo! and be happy with this as a way to play into yahoo!. it is unclear how much it would sell. >> what are the chances that alibaba and yahoo! japan may be overvalued and that we are underestimating the value of core yahoo!? >> that is a possibility. yahoo! japan has had a strong one. the equity markets are a different beast. investors are responding to
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valuations with very little information. there is so little that is known. it is possible. the reality is, the vast majority of investors are assigning values of $200 million in it. >> are investors going to be saying breakdown this company for us. you may have cash, where is it and how are you making money? are not digging in so much. they liked the ride. they are not doing all that extra homework. are they going to be informants? months.ur be time for the management and play. that will cause investors to pay more attention and care. when yahoo! bought tumbler, who cared? it didn't matter. investors would react more strongly. tumblr invented by an
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18-year-old that dropped out of high school. >> makeshift feel bad. >> it is time for bloomberg on the markets. slightly higher today after yesterday's confusing day for traders. janet yellen's talk gave a six-month timeline for raising rates. your sing a little bit of recovery. we are up three points. >> investors seem to like it. this clothing retailer, guess, is down after reporting fourth-quarter earnings. >> what is the last time you ran a guest store? >> when i was 14? >> coming up, he made a fortune
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as paypal's cofounder. we are talking about peter theil . he is talking about the secret to success. ♪
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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. welcome back to "market makers." i am stephanie ruhle. , and for mattteel miller, and for erik schatzker. the world's largest mobilephone company is paying the price for expansion. china mobile fell 16%. costs toue to rising attract new users and to build out high-speed networks. upts music, dr. dre signed
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1000 paying customers a day in the first month. started by dr. dre. analysts say streaming music services need at least 5 million paying customers to become profitable. it does not sound like they are there just yet. if you have problems getting presents over the holidays, don't blame fedex. carriers like his company took the heat for late arrivals. he says online retailers are guilty of sloppy packaging and not putting labels on correctly. not get their presence in time for christmas, they are mad at fedex and santa claus. >> executives from google and paypal are in berlin. so is hans nichols. names -- youbig spoke to big names in the business.
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give us the highlights. the take away is that berlin is not the tech scene that it wants to be. namely, it does not have the funders to spread enough money around and to spread it deeply. on top of that, you have companies where their founders leave too soon. all of that said, peter thiel said the city has a lot going for it. >> it is probably the place where it is most acceptable to try to do something new. if you say that you are an entrepreneur and you are starting a company, people will not say, why did you fail at your last job, why are you so incompetent or something like that. you cannot talk tech in berlin without talking edward
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snowden and the nsa revelations. is a bit of a libertarian. he said it would not have a lasting effect, but the main take away on the snowden revelations, incompetence. >> people are disturbed about the intrusiveness across the board. it is thething about sense that we are not dealing with a big brother type state with the nsa knowing everything. it was intrusive, but it was massively competent. it was on autopilot that simply come -- collected all of the data in the world because it could. i don't think it did much with it. the best part about doing an interview, he lapses in and out of german. you must love that because
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you go in and out of speaking german. while he is saying that some of the entrepreneurs are selling too quickly, isn't it tough for us to swallow when you look him -- at the valuation of these companies. how does a young entrepreneur say it is too soon? these are huge numbers. what's apt was focused and they turn down a lot of offers. they were focused on growing their business. another ceo said he talked to too many ceos that want to be bought instead of doing the buying. is an idea that you want to have a quick payout and have a quick exit. berlin has not had a big ipo. there is an idea that people are trying to do it for the wrong reasons. they're trying to build a company to get bought out. you build a company that is not that valuable. whatsapptimes did
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turned down or rebuffed facebook's offers? it was good 18 months. >> what is going to be the next hot item? >> the one i think i am going to use is transfer wide. allows you to transfer euros into dollars at very low fees. i am going to get a berlin makeover. >> i want to see it. >> what do you call those dresses? >> what i am going to wear, it is probably not safe for bloomberg television. it is a family program. aboutare really excited seeing whatever that outfit is going to be. thank you for joining us. >> i hope it involves long, blond braids.
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i want to see hans nichols, long legs, short skirt, it would look great. to pay more for margaritas. those are fighting words. alix steel will have that story when we come back. if you miss any of our interviews, you can watch them on apple tv. tv -- it is everywhere. lucky you. stay with us. ♪
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>> welcome back to "market makers." i like my margaritas on the rock with salt. don't forget the lime. the cost could be on the rise. alex bang -- alix is here to break it down for us. i have some data.
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we called some local stores and they range anywhere from four dollars to $11.50. a 4: a reader that is pretty cheap. margarita, that is pretty cheap. i don't know if you will pay more for your limes necessarily, but the issue is that the u.s. imports a lot of limes. most of that is all used for alcohol. corona, margaritas. the majority of the lines come come from mexico and the prices are through the roof. lime growers have
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creating a monopoly. they say they're going to control the price to get the price they want and they're restricting their supply. this is a commodities issue. i was in whole foods and saw a bag of the cutest limes. it was $9. that is not that cute anymore. >> it already costs about $.44 per pound per line. it used to be $.31. we are seeing this continued increase as we eat more lines. -- limes. could this spark growers in florida to get back in again? -- what doesching this mean? cinco de mayo is coming up. withey still have to deal the hurricane issue.
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is reallyet, tequila tricky. that i got a plan is fragile. agave plant ist fragile. >> tequila is also very trendy right now. line ofan has his own tequila. just how much it costs. >> $58. for a shot of bob pitman's tequila. "entourage" -- avione. coming up, thank you for the update on limes and tequila. cinco de mayo, that is the fifth of may. when we come back, the hotel chain that has plans for overseas.
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you bige one that gives chocolate chip cookies when you check-in. if you have not been there, you're going to want to. ♪
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doubletree is expanding its roots. it has almost 150 new hotels in the pipeline. congratulations. you are in new york as part of this grand expansion plan. what is it? >> we are celebrating cookie care. the launch of the global program to introduce the chocolate chip cookie to people who may not have sampled one. >> what exactly is this? >> we are going to 25 cities worldwide to distribute cookies to introduce the spirit of hospitality to people around the
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world. it is for people who have not had experience and one of our hotels. we will be opening 60 hotels this year around the world. say europe, asia, it makes me think it is not a matter of the cookie. do people have the money to be vacationing? >> our business is strong. we are opening hotels around the world. turkey, canada, we have open for hotels in australia. china is our largest growth market. we are opening in countries around the world. the distinction between business travelers and leisure travelers? are they near airports or in the middle of nowhere? >> we have locations around the world. we have city center hotels, hotels of focus on groups. >> what is the ratio? >> most of our growth is in the city center hotels. >> what is a business traveler while right now?
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>> and experience they can customize and of the people in the hotels can deliver to them. >> what does that mean? they want to know when they check into a double tree that doubletree knows the seven things they like? >> if they are a health and honors member, we do. when a guest checks into our hotel, we focus on the little things. it requires a different sense of service. we call a care culture where we are focusing on what you need or want and we listen well and communicate with guests and a way that other hotel chains do not. >> it seems increasingly people want to check in and out using their phone, they want to put their preferences on their phones. e-check in for quite some time. that is an area we are focusing on.
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social media for us, it is a key way we communicate with our guest. we promote our brand and we listen to communications from guests while they are in the hotel. >> i am hearing personalization. there is nothing more personal than this -- grace. the massive number of people that list their homes. what kind of a risk is it to your business? >> when you are staying at a doubletree by hilton, we have core set of standards that can be the same. you get a little bit more comfort and customization. with doubletree by hilton, we have no two hotels that are alike. staying with us, we will give you that. the core standard, like the bed and the chocolate chip cookie,
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it transcends different cultures. the business center, fitness center, the services that we provide are consistent that can be -- in environments that can be different depending on where you are. is reporting it could raise enough to value it at $10 million. that is an enormous growth and valuation. you have to be thinking about how to compete. that is verye important, getting a lot of publicity now. we have not seen an effect of that on our business. it is a different kind of traveler for a different trip purpose. the focus we have on business transient travelers midweek and then group travelers, predominantly families on the weekends. it continues to be strong. new thing a cool, you're putting in your hotel? people like experiences. they like to sit in the lobby. they like to work on ipads.
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they're not looking to go to their room. what is the special thing doubletree is offering that is driving customers? >> we have a new food and beverage concept that we are testing. it takes the grab and go concept and puts it in a hotel environment. we have common tables where work. can sit and we have a food and beverage menu open 18 hours a day. it is a different kind of food and beverage concept that talks to the kind of experience that people can personalize. if you are there for social purposes or a social trip or with your family, gives you an opportunity to take advantage of a flexible menu. >> even if you are in business travel, going to your room and only having that minibar, that is a downer. at my hotel every night for a week. it was pathetic.
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congratulations. thank you. i love the cookie concept. the globaleaf, he is head of doubletree by hilton. >> the next move for stocks. we will tell you. bloomberg will be going "on the markets." ♪
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>> that is it for "market makers." we had alix steel talking
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margaritas. , his upcoming makeover. matt miller joined us. >> what are we going to do with jobs? we are going to speak with the chief market strategist, david zervos. he gave janet yellen ac minus regarding her comments yesterday. >> it is "on the markets." scarlet fu has more. >> thank you. we are driving in -- diving into derivatives. stocks are recovering from a drop sparked by janet yellen's comments yesterday that interest rates may be headed higher sooner rather than later. what is the read from the options market. i am joined by the managing
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director of -- capital. talk to us about what the options are. >> volatility has returned. -- monitor volatility. today it is around 15. the longer-term is around 20 on the vix. low vix means low level of uncertainty. >> does this move us in the direction of 20? >> the comments spooked the markets initially. we have recovered from that today. rates will go up at some point. slow down.needs to everyone showed up right into their forecast. seeing in theu trading of the sp why and what can it tell us about the next couple of months?
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things will settle down and you will not see a ramp up until later on in the year. >> spdr options are preference to our clients. it is an active etf for our clients right now. lots of the quiddity in the etf. that helps us. >> exxon mobil, a lot of trading and options of that company. the underlying stock has been stuck in the mid $90 range for the last five weeks or so. why so much action in bullish options? used as a tracker of oil prices overall. it is generally quite low. bullish call options indicate prices could be at a higher in the near term. >> this is a way for people to trade on oil prices without actually having to trade on oil futures. let's get to your trades. is trading at a record
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high. you think there is a reason for caution. >> we do not like to enter new bullish positions. we like to see a pullback. have -- we >> is this a stock substitution strategy? >> we would like to use it as an income strategy. we do not like to own the security. we seek to generate income. want -- and all the premium that we receive. >> let's go back to the chart that shows the profit and loss opportunity. the loss potential is much higher than the profit potential. >> the pullback that we might get would allow us to be a seller. we are willing to accept a degree of loss, but we are
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bullish on visa over the longer-term. >> the risk is a little bit higher if you do. thank u so much. .areth ryan we want to take a look at how stocks are trading after janet yellen signaled interest rates could have higher. the s&p 500 gaining five and a half points. 7.5.asdaq up by in 30 "on the markets" minutes. lunch money is up next. ♪ .
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welcome to "lunch money." miller.t let's take a look at the menu. in world, russian lawmakers take another step toward absorbing crimea as ukraine's prime minister meets with european leaders in brussels. in tech, a rare interview with the guy who helped make online shopping easier. in design, turning junk into jams. we hear from the architect to high new york city's very popular and successful highline.


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